Memeorandum

February 20, 2008

Economic Mobility

A new report is out on economic mobility and the Times slant is that things aren't all that grim... yet, anyway:

Higher Education Gap May Slow Economic Mobility

By Erik Eckholm

Economic mobility, the chance
that children of the poor or middle class will climb up the income
ladder, has not changed significantly over the last three decades, a
study being released on Wednesday says.

The authors of the study, by scholars at the Brookings Institution
in Washington and sponsored by the Pew Charitable Trusts, warned that
widening gaps in higher education between rich and poor, whites and
minorities, could soon lead to a downturn in opportunities for the
poorest families.

The researchers found that Hispanic and black Americans were falling
behind whites and Asians in earning college degrees, making it harder
for them to enter the middle class or higher.

“A growing difference in education levels between income and racial
groups, especially in college degrees, implies that mobility will be
lower in the future than it is today,” said Ron Haskins, a former
Republican official and welfare expert who wrote the education section
of the report.

Hmm. The section on intergenerational mobility straddles the issue - most research shows no strong trend but some points to a decline in mobility, we are told.

Since Paul Krugman tackled this very topic a few days back, let's hear from him:

Mainly, however, excuses for poverty involve the assertion that the
United States is a land of opportunity, a place where people can start
out poor, work hard and become rich.

But the fact of the matter
is that Horatio Alger stories are rare, and stories of people trapped
by their parents’ poverty are all too common. According to one recent
estimate, American children born to parents in the bottom fourth of the
income distribution have almost a 50 percent chance of staying there —
and almost a two-thirds chance of remaining stuck if they’re black.

"Horatio Alger stories are rare". OK, from the Times today:

There is some good news. The study highlights the powerful role that
college can have in helping people change their station in life.
Someone born into a family in the lowest fifth of earners who graduates
from college has a 19 percent chance of joining the highest fifth of
earners in adulthood and a 62 percent chance of joining the middle
class or better.

Evidently, if Horatio Alger can rally himself to and through college, success is not so rare. However:

In recent years, 11 percent of children from the poorest families have
earned college degrees, compared with 53 percent of children from the
top fifth.

My math tells me that if 11percent of bottom-quintile kids go to college and 19 percent of that group end up in the top quintile, we are talking abut 2 percent of all bottom-quintile kids making it to the top. I will grudgingly acknowledge that "rare" is not outrageous in that context.

As to reasons:

Mr. Butler said experts were likely to disagree about the reasons
and, hence, on policies to improve mobility. Conservative scholars are
more apt to fault cultural norms and the breakdown of families while
liberals put more emphasis on the changing structure of the economy and
the need for government to provide safety nets and aid for poor
families.

“We may well have an economy that rewards certain traits that are
typically passed on from parents to children, the importance of
education, optimism, a propensity to work hard, entrepreneurship and so
on,” he said.

To the extent that the economy rewards those traits, he added,
“you’d expect the incomes of children to track more with that of their
parents.”

Comments

Well, you need to view it by area. Look at high school graduation rates, college enrollment and graduation rates, etc. My wife and I are both the first generations of our families to graduate college. We did it on our own. It was possible because we were encouraged and willing to work for it. I don't know why that's any different for anyone anywhere, whether it's a nobody Redneck from MO, or black kid in Detroit.

emphasis on the changing structure of the economy and the need for government to provide safety nets and aid for poor families.

It interests me that those safety nets and aid have become more entrenched over the same time period the opportunity gap seems to be widening.
I'm always amused at the "whites and Asians" vs "minorities" construct.

It would seem that everyone wants to live in Lake Wobegon--where all the children are above average.

The premise as outlined is foolish: higher education used as a proxy for forecasting economic mobility. The proportion of HS grads that go to college today is much higher than 30 years ago--vastly higher. (Though I don't know the exact number, 10% of HS grads went to college 50 years ago, while the rate today is 40%.)

The income mobility criteria is equally flawed--it's a relative comparison based on a ranking by income quintiles, rather than an real comparison based on (inflation-adjusted) standard of living.

This is an exercise about "keeping up with the Joneses" rather than "getting ahead".

Someone who grew up middle-class 30 years ago, who is merely middle-class today, would show no economic mobility. Who in their right mind would say they were no better off today, than 30 years ago?

The report strikes me as rent seeking, by specified interest groups, for more government subsidies and programs for college, including quotas for admittance. It's advocacy, not scholarship.

Yes, forbes. OTOH let's make every gene count--make every bright woman mate with and rear the children of all the losers and dopes and then we can have a more perfect way of measuring nature versus nurture (and rent seeking)

"It was possible because we were encouraged and willing to work for it."

I would imagine that somebody in the house also provided an example of behavior by getting up and going to work every day too. Showing up really is about 80% of the battle and I'm unaware of any government program that offers a method that will overcome the lassitude engendered by watching parents getting through life sitting on a couch in a room with a TV but not one magazine or book, waiting patiently for their next handout.

Some kids from such an environment do have a spark and do get out. There's no question about that. The question is whether government programs that provide the means for the parents to set poor examples are a greater harm than good.

My sister, a social worker in Wisconsin, says the Workfare program dramatically changed the culture of the lower class in Milwaukee. When parents had to get up and get to work, their habitually truant kids did, too. When meals had to be planned, instead of sending out the kids to the nearest convenience store for snacks, the kids learned about planning..etc.

The question is whether government programs that provide the means for the parents to set poor examples are a greater harm than good.

I don't think it's even a question.

If you are raised to believe that education is the route to success, you take that route. It's simple. It's an issue of values. You've either got them or you don't.

What's funny is that the Obamas are where they are because someone had some values. And instead of talking about that leg-up he wants now to absolve people of that very responsibility. And that seems to make Mrs. Obama proud.

I wonder if your sister is seeing the same results today as she did soon after passage of the TANF provisions in 1996. It's my understanding (somewhat supported by the current increase in illegitimate births) that the 2005 revisions provided a means of relief from those less than onerous "have to work" rules.

As MayBee points out, a social welfare safety net and college aid have become permanent fixtures over the past 30+ years, while the report claims that economic mobility hasn't changed.

(Apparently, neither has analytical prowess.)

At the end of the day, 20% of the population will be in the bottom quintile. If you make social welfare programs and college student aid universal entitlements--more so than they are today, i.e. more government aid--than you are providing a disincentive to hard work and encouraging no outside effort be made in order to pay for a college education.

In other words, college merely becomes an entitlement, and therefore worthless.

Most people, having recognized a costly program having little (or zero) effect upon outcomes, would discontinue the program as worthless. Only in Washington is it suggested that additional resources be added to zero outcome programs. And only in Washington is it suggested that government hand-outs will aid one's mobility from the bottom quintile--as if the bottom quintile would be eliminated by such programs.

Krugman is conspicuously uninterested in the fact that in the 1960s we launched The War on Poverty that not only didn't have the advertised results, it probably is the reason for the permanent underclass.

I see Mexicans every day who barely speak English, improving their living standards by working.

My math tells me that if 11percent of bottom-quintile kids go to college and 19 percent of that group end up in the top quintile, we are talking abut 2 percent of all bottom-quintile kids making it to the top.

Your math! It needs work!

You can't compute the percentage of "all bottom-quintile kids making it to the top" with these numbers.

When I was in college a hot item for discussion was "The Status Seekers," by Vance Packard, which (I just checked) was published in 1959. The one thing I remember from the book was his dividing Americans into two classes: those who assumed that their children would go to college as a matter of course, and those for whom that would be an extraordinary event.

Then someone suggested that the entire world is divided into two classes: those who believe that the world is divided into two classes, and those who do not.

So I pretty much gave up on all that crap, and set out to seek my fortune.

Most people, having recognized a costly program having little (or zero) effect upon outcomes, would discontinue the program as worthless. Only in Washington is it suggested that additional resources be added to zero outcome programs.

Oh, I think that it's way worse than that... The way that the poverty industry measures poverty is that they don't count any anti-poverty programs as having any effect. Food stamps, WIC, section 8 subsidies, etc. -- none of them count as income. So we have a "poverty industry" which first of all cooks the books to make it look like the programs have no effect, so that they can feel morally superior to the terrible insensitive people who want to discontinue the programs or to at least not to expand them.

The researchers found that Hispanic and black Americans were falling behind whites and Asians in earning college degrees,
but immigration reform is still a good idea because Hispanic graduation rates will revert to white/Asian levels if we will only give permanent residency to another 10 or 15 million people from south of the border.

After Katrina, a friend of mine in a very involved church, "adopted" a family and brought them to California. They provided a nice fully furnished and equipped apartment, a car for transportation, many personal items, etc. They allowed them several months to settle in, to recover, to assimilate and then brought the adults several good job offers to choose from.

Well . . . jobs were not what they wanted and many excuses were given why no job offer was just right.

Some folks have made a "career" out of being "poor." I would even go so far to say that for some, being "poor" is their profession, because I experienced it myself in my own church and charitable endeavors.

There is a mindset and cultural lifestyle for some folks that education, programs, and assistance cannot overcome.

American children born to parents in the bottom fourth of the income distribution have almost a 50 percent chance of staying there
Which means that more than half are movin' on up into the upper 3/4ths. When you think about the history of the rest of the world, that's incredibly good! Michelle should be proud.